insurance company- union assurance fin report

7/28/2019 Insurance Company- Union Assurance Fin Report

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1Union Assurance PLC

Year ended 31 December

Interim Report 12 months ended 31 December 2011

Trust in

transparency.


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Independent Auditors Report

TO THE SHAREHOLDERS OF UNIONASSURANCE PLC

Report on the Financial StatementsWe have audited the accompanying nancial

statements o Union Assurance PLC, which

comprise the balance sheet as at December

31, 2011, and the income statement, statement

o changes in equity and cash fow statement

or the year then ended, and a summary osignicant accounting policies and other

explanatory notes thereon.

Managements Responsibility or theFinancial StatementsManagement is responsible or the preparation

and air presentation o these nancial

statements in accordance with Sri Lanka

Accounting Standards. This responsibility

includes: designing, implementing and

maintaining internal control relevant to the

preparation and air presentation o nancialstatements that are ree rom material

misstatement, whether due to raud or error;

selecting and applying appropriate accounting

policies; and making accounting estimates that

are reasonable in the circumstances.

Scope o Audit and Basis o OpinionOur responsibility is to express an opinion on

these nancial statements based on our audit.

We conducted our audit in accordance with Sri

Lanka Auditing Standards. Those standards

require that we plan and perorm the audit

to obtain reasonable assurance whether the

nancial statements are ree rom material

misstatement.

An audit includes examining, on a test

basis, evidence supporting the amounts and

disclosures in the nancial statements. An

audit also includes assessing the accounting

policies used and signicant estimates made by

management, as well as evaluating the overall

nancial statement presentation.

We have obtained all the inormation and

explanations which to the best o our

knowledge and belie were necessary or the

purposes o our audit. We thereore believe that

our audit provides a reasonable basis or our

opinion.

OpinionIn our opinion, so ar as appears rom our

examination, the Company maintained

proper accounting records or the year

ended December 31, 2011 and the nancial

statements give a true and air view o the

Companys state o aairs as at December

31, 2011 and its prot and cash fows or the

year then ended in accordance with Sri Lanka

Accounting Standards.

Report on Other Legal andRegulatory RequirementsThese nancial statements also comply with

the requirements o Sections 151(2) o the

Companies Act No. 07 o 2007. Pursuant to

Section 47(2) o the Regulation o Insurance

Industry Act No.43 o 2000, we also report, so

ar as appears rom our examination, proper

accounting records have been maintained as

required by the relevant rules made by the

Insurance Board o Sri Lanka.

Chartered Accountants

Colombo

23rd February 2012


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Balance Sheet

As at 31.12.2011 31.12.2010Rs. 000 Rs. 000

AssetsInvestments 15,009,473 12,817,417

Investments - lie - unit linked 549,823 168,109Quoted equities at market value 920,993 767,431Intangible assets 49,500 49,500Property, plant and equipment 1,298,380 1,108,723Loans to lie policyholders 246,674 232,618Reinsurance receivable 495,776 579,009Premiums receivable 1,056,375 1,237,594Other assets 1,787,023 1,540,932Other assets - lie - unit linked 8,705 11,157Cash and cash equivalents 373,413 390,138Total assets 21,796,135 18,902,628

Liabilities and equityLiabilitiesInsurance provision - lie - conventional 13,440,459 11,769,308Insurance provision - lie - unit linked 555,541 165,835Insurance provision - non lie 2,942,950 2,716,888Reinsurance payable 441,567 405,764Retirement benet obligation 154,702 132,422Other liabilities 825,263 898,429Other liabilities - lie - unit linked 3,344 13,672Current tax liabilities 67,549 81,558Deerred tax liability 28,161 13,948Bank overdrat 108,734 71,695

Total liabilities 18,568,270 16,269,519

EquityStated capital 388,433 388,433Capital reserves 714,056 584,178Revenue reserves 2,125,376 1,660,498Total equity 3,227,865 2,633,109

Total liabilities and equity 21,796,135 18,902,628

The notes to the interim nancial statements orm an integral part o the interim nancial statements.

I certiy that the above nancial statements comply with the requirements o the Companies Act No. 7 o 2007

Indika Prematunga

Chie Financial Ofcer

The Board o Directors is responsible or the preparation and presentation o these nancial statementsSigned on behal o the Board

A. D. Gunewardene S. Rajendra

Chairman Director

Colombo23 February 2012


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Statement of Income

Year ended 31 December Note 2011 2010 Change

Rs. 000 Rs. 000 %

Revenue 4 8,975,572 7,919,528 13

Gross written premium 5 8,732,176 7,133,375 22

Less: premium ceded to reinsurers (1,119,502) (1,025,924) 9

Net written premium 7,612,674 6,107,451 25

Net change in reserve or unearned premium (261,420) (416,944) (37)

Net earned premium 7,351,254 5,690,507 29

Benets, losses and expenses

Insurance claims and benets (net) (2,912,078) (2,393,149) 22

Increase in provision or lie business (2,044,118) (2,123,447) (4)

Underwriting and net acquisition costs

(including reinsurance) (1,087,919) (848,296) 28

Total benets, losses and expenses (6,044,115) (5,364,892) 13

Net premium less benets, losses and expenses 1,307,139 325,615 301

Other revenue

Income rom investments 1,549,949 2,129,425 (27)

Other income 74,369 99,596 (25)

Expenses

Other operating, investment related and

administrative expenses (2,040,423) (1,853,829) 10

Depreciation on property, plant and equipment (128,694) (107,766) 19

Prot beore income tax 6 762,340 593,041 29

Income tax expense 7 (66,755) (81,070) (18)

Prot or the year 695,585 511,971 36

Earnings Per Share (Rs.) 9.27 6.83

(Restated)

Dividend per share (Rs) 5.00 3.13

(Restated)

The notes to the interim nancial statements orm an integral part o the interim nancial statements.


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Statement of Income

For the 03 months ended 31 December 2011 2010 Change

Rs. 000 Rs. 000 %

Revenue 2,380,945 2,130,278 12

Gross written premium 2,587,391 2,349,792 10

Less: premium ceded to reinsurers (307,883) (279,624) 10

Net written premium 2,279,508 2,070,168 10

Net change in reserve or unearned premium (243,627) (354,769) (31)

Net earned premium 2,035,881 1,715,399 19

Benets, losses and expenses

Insurance claims and benets (net) (802,779) (601,810) 33

Increase in provision or lie business (164,800) (198,760) (17)

Underwriting and net acquisition costs

(including reinsurance) (273,322) (276,418) (1)

Total benets, losses and expenses (1,240,901) (1,076,988) 15

Net premium less benets, losses and expenses 794,980 638,411 25

Other revenue

Income rom investments 332,780 389,821 (15)

Other income 12,285 25,058 (51)

Expenses

Other operating, investment related and

administrative expenses (562,860) (630,630) (11)

Depreciation on property, plant and equipment (33,819) (31,685) 7

Prot beore income tax 543,366 390,976 39

Income tax expense (29,346) (23,048) 27

Prot ater taxation 514,020 367,928 40

Earnings Per Share (Rs.) 6.85 4.91

(Restated)


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Statement of changes in Equity

Capital reserves

Stated Revaluation Reserve on Retained

capital reserve merger earnings Total

Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000

Balance as at 01st January 2010 388,433 567,607 16,752 1,332,359 2,305,151

Final dividend 2009 - - - (187,500) (187,500)

Transer rom revaluation

reserve to retained earnings - (3,668) 3,668

Tax eect o revaluation

(recognized) / reversed in equity - 3,487 - - 3,487

Net prot or the year - - - 511,971 511,971

Balance as at 31 December 2010 388,433 567,426 16,752 1,660,498 2,633,109

Final dividend 2010 - - - (234,375) (234,375)

Transer rom revaluation

reserve to retained earnings - (3,668) - 3,668 -

Surplus on revaluation 147,759 - - 147,759

Tax eect o revaluation

(recognized)/reversed in equity - (14,213) - - (14,213)

Net prot or the year - - - 695,585 695,585

Balance as at 31 December 2011 388,433 697,304 16,752 2,125,376 3,227,865


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Cash Flow Statement

For the Year ended 31 December 2011 2010

Rs. 000 Rs. 000

Cash fow rom operating activitiesPremium received rom customers 8,913,395 6,741,538

Reinsurance premium paid (881,163) (799,902)Claims paid (3,066,944) (2,739,862)Reinsurance receipts in respects o claims 308,008 390,453Cash paid to and on behal o employees (860,168) (691,375)Interest received 1,740,415 2,078,762Dividends received 27,070 14,828Other operating cash payments (2,593,688) (2,059,096)Cash fow rom operating activities (Note A) 3,586,925 2,935,346

Retiring gratuity paid (9,263) (14,505)Income tax and ESC paid (69,827) (73,872)Net cash rom operating activities 3,507,835 2,846,969

Cash fow rom investing activitiesAcquisition o liquid investments (other than cash equivalents) (1,887,440) (890,708)Acquisition o other investments (other than cash equivalents) (5,476,914) (3,669,031)Proceeds rom Sale rom liquid investments (other than cash equivalents) 1,840,688 586,263Proceeds rom Sale rom other investments (other than cash equivalents) 2,341,417 1,524,859

Acquisition o property, plant and equipment (170,626) (146,514)Proceeds on sale o property, plant and equipment 3,992 4,426Net cash rom / (used) in investing activities (3,348,884) (2,590,705)

Net cash infow beore nancing activities 158,951 256,264

Cash fow rom nancing activitiesDividends paid (213,057) (187,500)

Net cash rom (used in) nancing activities (213,057) (187,500)Increase in cash and cash equivalents (Note B) (54,105) 68,764

Notes to the cash fow statementA. Reconciliation o prot beore taxation withcash rom operating activitiesProt beore income tax 762,340 593,041Depreciation on property, plant and equipment 128,694 107,766Change in debtors (38,516) (33,704)Change in lie insurance und 2,044,117 2,122,445Change in unearned premiums and deerred acquisition costs 259,687 387,190Change in claims provisions (33,625) (278,051)Change in creditors (83,789) 257,123

Exchange (gain) / loss (341) 34Gain on sale o property, plant and equipment (3,959) (4,341)Unrealised loss / (gain) on equities at market value 520,775 (267,129)Change in Provision or retiring gratuity 31,542 50,972Cash rom operating activities 3,586,925 2,935,346

B. Increase in cash and cash equivalentsCash and cash equivalents 373,413 390,138Bank overdrat (108,734) (71,695)Net cash at bank and in hand and cash equivalents 264,679 318,443Eect o exchange rate fuctuations on cash held (341) 34Net cash and cash equivalents or the current year 264,338 318,477Net cash and cash equivalents at the beginning o the year 318,443 249,713

Increase/(decrease) in cash and cash equivalents (54,105) 68,764


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Notes to the Financial Statements

1. Accounting policies and methods o computation as stated in the annual report 2010 are

ollowed in the preparation o these interim nancial statements . Further, provisions

o the new Companies Act No. 7 o 2007 have been considered in preparing the interim nancial

statements o the Company.

2. Figures or the year were audited.

3. Comparative gures have been restated wherever necessary to conorm to the current periods

presentation.

4. Revenue

For the year ended 31st December

2011 2010Rs. 000 Rs. 000

General 3,526,602 2,745,476

Lie 5,448,970 5,174,052

Total 8,975,572 7,919,528

General revenue consists o net earned premium and income rom investments and other income.

Lie revenue consists o net written premium and income rom investments and other income.

5. Gross written premium

For the year ended 31st December

2011 2010

Rs. 000 Rs. 000

General 4,260,549 3,667,870

Lie 4,471,627 3,465,505

8,732,176 7,133,375

6. Prot beore income tax

For the year ended 31st December 2011 2010

Rs. 000 Rs. 000

General 333,340 268,041

Lie 429,000 325,000

Total 762,340 593,041


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7. Income tax expense

For the year ended 31st December 2011 2010

Rs. 000 Rs. 000

Income tax on current year prot 66,597 79,913

Social responsibility levy - 1,200

66,597 81,113

Under / (over) provision in respect o previous year 158 (43)

Total income tax expense or the year 66,755 81,070

8. Prots rom lie insurance

The valuation o lie insurance und as at 31 December 2011 was made by Mr. M Poopalanathan oActuarial & Management Consultants (Pvt) Limited, who recommended a sum o Rs 429 Million to be

transerred rom lie insurance und to the shareholders und or the year.

9. Stated capital represented by shares in issue as given below:

Number o shares as at 31.12.2011 31.12.2010

Ordinary shares 75,000,000 37,500,000

At an Extraordinary General Meeting held on 23rd June 2011, the shareholders approved a sub

division o the company shares, whereby one (1) existing share was sub divided to two (2), thereby

increasing the ordinary shares in issue rom 37,500,000 to 75,000,000 ordinary shares. For the

purpose o calculating Earnings Per Share (EPS) , the increased number o ordinary shares has been

considered or all periods.

10. Events ater the Balance Sheet date

There has been no events subsequent to the balance sheet date, which would have any material

eect on the company, other than the ollowing;

The Board o directors o the company has declared a nal dividend o Rs.5.00 per share or the

nancial year ended 31 December 2011.

As required by section 56 (2) o the Companies Act No. 07 o 2007, the Board o directors

has conrmed that the company satises the solvency test in accordance with section 57 o the

Companies Act No. 07 o 2007, and has obtained a certicate rom auditors, prior to declaring a

nal dividend.

In accordance with the Sri Lanka Accounting Standard 12 (Revised 2005), Events ater theBalance Sheet date, the nal dividend has not been recognized as a liability in the nancial

statements as at 31 December 2011.


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Notes to the Financial Statements contd.

11. The Institute o Chartered Accountants o Sri Lanka has issued a new volume o Sri Lanka

accounting standards which will become applicable or nancial periods beginning on or ater

1st January 2012. Accordingly, these standards have not been applied in preparing these Interim

Financial Statements as they were not eective or the period ended 31st December 2011.

These Sri Lanka accounting standards comprise accounting standards prexed both SLFRS(corresponding to IFRS) and LKAS (corresponding to IAS). Application o Sri Lanka accounting

standards prexed SLFRS and LKAS or the rst time shall be deemed to be an adoption

o SLFRSs. The company is currently in the process o evaluating the potential eects o these

standards on its nancial statements.

12. The nature o the related party transactions in the current period is similar to those reported in the

Audited Financial Statements 2010.

13. In the opinion o Directors and in consultation with the company lawyers litigation currentlypending against the company will not have a material impact on the reported results or uture

operations o the company.

All pending litigation or claims have been evaluated and adequate provisions have been made in

the nancial statements.

14. Share Inormation

31.12.2011 31.12.2010

Rs. Rs.

(Restated)

Net assets per share 43.04 35.11

Market price per share 108.10 122.10

Highest price per share or the period 127.00 198.00

Lowest price per share or the period 91.50 90.75


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15. Twenty Largest Shareholders

31 December 2011

Name o Shareholder No o Shares %

1 John Keells Holdings Plc 63,695,530 84.932 Whittall Boustead Limited 5,552,618 7.403 Mackinnons & Keells Financial Services Limited 2,492,336 3.324 Waldock Mackenzie Ltd/Hi-Line Trading (Pvt) Ltd 329,400 0.445 Waldock Mackenzie Ltd/S.N.P.Palihena And Waldock

Mackenzie Ltd/S.N.P.Palihena And A.S.Palihena 300,000 0.406 Corporate Holdings (Private) Limited 130,702 0.177 Dr. A.C. Visvalingam 74,900 0.108 Mr. J.D. Bandaranayake 65,400 0.099 Mr. H.A.D. Ratnapala 56,250 0.0810 Mr. J.W. Nanayakkara 56,250 0.0811 Mrs. R.Z. Wikramanayake 48,364 0.06

12 Dr. N.I. Wikramanayake 47,978 0.0613 Mr. A.A. Mashoor 45,600 0.0614 Mr. G.M. Abdulhussein 41,810 0.0615 Mr. T.G. Perera 39,000 0.0516 Mr. H.A. Rehmanjee 32,022 0.0417 Mrs. L. Amaradasa 33,750 0.0518 Mr. S. Nishyanthan 30,300 0.0419 Mrs. M.R. Wijetunga 28,124 0.0420 Mr. S. Vasudevan 25,200 0.03

73,125,534 97.50Others 1,874,466 2.50

Total 75,000,000 100.00

16. Directors Shareholdings

No. o Shares No. o Shares

31.12.2011 31.12.2010

1 Mr. A. D. Gunewardene (Chairman) 7,492 3,7462 Mrs. D. C. Alagaratnam Nil Nil3 Mr. S. Rajendra Nil Nil4 Mr. A.S. De Zoysa Nil Ni5 Mr. G. F. C. De Saram Nil Nil6 Mr. H. A. J. De Silva Wijeyeratne Nil Nil

17. Share holding - Chie Executive Ocer

Mr. Dirk Pereira Nil Nil

18. Public Shareholding

31.12,2011 31.12.2010

No. o Shares % o Shares No. o Shares % o Shares

Public shareholding 3,252,024 4.34% 7,228,612 19.28%


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As at 31.12.2011 31.12.2010

Rs. 000 Rs. 000

Assets

Investments 11,450,651 9,840,485

Investments - lie - unit linked 549,823 168,109

Quoted equities at market value 856,715 766,291

Property, plant and equipment 1,069,577 912,001

Loans to lie policyholders 246,674 232,618

Reinsurance receivable 46,879 49,785

Other assets 850,637 738,270

Other assets - lie - unit linked 8,705 11,157

Cash and cash equivalents 211,283 269,127

Total assets 15,290,944 12,987,842

Reserves

Reserve on cornhill merger 16,752 16,752

Revaluation reserve 221,444 91,566

Total Reserves 238,196 108,318

LiabilitiesInsurance provision - lie - conventional 13,440,459 11,769,308

Insurance provision - lie - unit linked 555,541 165,834

Reinsurance creditors 68,489 42,681

Provision or retirement benets 99,124 81,949

Other liabilities 855,418 776,969

Other liabilities - lie - unit linked 3,344 13,672

Bank overdrat 30,373 29,109

Total liabilities and reserves 15,290,944 12,987,842

Insurance Provision - lie

As at 31.12.2011 31.12.2010

Rs. 000 Rs. 000

Insurance Provision - lie 13,211,359 11,579,108

Unclaimed benets 229,100 190,200

Total 13,440,459 11,769,308

Supplementary Information - Balance sheet of the life insurance fund


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Union Assurance Centre

20 St. Michaels Road Colombo 3

Sri Lanka.

www.unionassurance.lk

insurance company- union assurance fin report

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